IDC predicts 2% growth in Western European IT market

IT spending in the Western European IT market, which was in pretty bad shape in 2002, will gradually pick up this year. New IT spending data figures from IDC predict a modest revival of 2%.

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By  Vijaya Cherian Published  April 10, 2003

IT spending in the Western European IT market, which was in pretty bad shape in 2002, will gradually pick up this year. New IT spending data figures from IDC predict a modest revival of 2%.

Package software and services will capture most of the rebound, expanding to 3.3% and 2.5% respectively while the hardware market will remain essentially flat. Some of the more dynamic markets will include mobile connectivity solutions, Web services, and converged devices.

"Overall, the Western European IT market remains inhibited by challenging business conditions and tight spending on capital goods and technology. Nevertheless, prospects are encouraging, and we see some bright spots emerging in the market, particularly around the concept of mobility and wireless," said Vicky Hawksworth, research manager for IDC's European IT Markets Center.

Amid positive trends, the IT market will continue to consolidate in the first half of the year, and spending on IT will remain essentially discretionary. European results from IDC's recent end-user survey show that 37% of the companies surveyed will spend most of their 2003 IT budget on routine infrastructure upgrades, while spending on new initiatives will be low priority, particularly among larger organisations. Companies will tend to migrate away from large, expensive rollouts, moving instead towards smaller, point-to-point solutions with shorter implementation times.

IDC's latest forecasts have factored in current economic uncertainty and the impact of a short ground war in Iraq on business and consumer confidence. "Given today's economic climate, organisations are still reluctant to finance major equipment upgrades. Their number one priority remains to restore profit margins and keep costs down. While this may be detrimental to IT spending in the short term, it will generate a substantial amount of pent up demand once confidence returns," says Elsa Opitz, research analyst with IDC's European IT Markets Centre.

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